Article

What happens if I forgive the Loan? (Teaser - Tax Questions!)

Provided by:  Jennifer Kirschenbaum, Esq.

September 19, 2019

Question:

Hi Jennifer,

Thank you for addressing the loan question.  What happens if I make a loan to an employee and then I forgive the amount after the employee works long enough? 

Thanks, 
Dr. L

Answer:


Now we're getting in to TAX, which is definitely not my area.  I'll start and end with - you have to consult you accountant.  I'll stick in the middle that forgiveness of a debt may result in a tax consequence, including inclusion as income or qualifying under gift tax rules.  More on that here - https://www.irs.gov/taxtopics/tc431.   Any time you are looking to make a loan, you need me, your lawyer, and your accountant on the same page.  We need to understand the proper vehicle to capture the loan, security and tax implications.  Sayings exist for a reason.  The one I would apply in the context of friendly loans - No Good Deed Goes Unpunished.  Paper properly,  Understand consequences.  Consult legal AND your accountant.  

Note: for our purposes we are not touching the issue of collateral.  Whole other discussion... 

Good questions! 



Looking for the KK Healthcare Exchange?  Click Here. 

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Looking for HIPAA and compliance forms?  
Click here to visit our website.
Have a question or comment for Jennifer?
Contact Jennifer at Jennifer@Kirschenbaumesq.com or  at (516) 747-6700 x. 302.
Interested in having Jennifer speak at an event or
at a residency/fellowship program?
Contact Jennifer directly at (516) 747-6700 x. 302 or at Jennifer@Kirschenbaumesq.com
Click here to learn about
K&K's Prepaid Legal Audit/Investigation Defense Now!
What happens if I forgive the Loan? (Teaser - Tax Questions!)-September 19, 2019-Jennifer Kirschenbaum

Article

What happens if I forgive the Loan? (Teaser - Tax Questions!)

Provided by:  Jennifer Kirschenbaum, Esq.

September 19, 2019

Question:

Hi Jennifer,

Thank you for addressing the loan question.  What happens if I make a loan to an employee and then I forgive the amount after the employee works long enough? 

Thanks, 
Dr. L

Answer:


Now we're getting in to TAX, which is definitely not my area.  I'll start and end with - you have to consult you accountant.  I'll stick in the middle that forgiveness of a debt may result in a tax consequence, including inclusion as income or qualifying under gift tax rules.  More on that here - https://www.irs.gov/taxtopics/tc431.   Any time you are looking to make a loan, you need me, your lawyer, and your accountant on the same page.  We need to understand the proper vehicle to capture the loan, security and tax implications.  Sayings exist for a reason.  The one I would apply in the context of friendly loans - No Good Deed Goes Unpunished.  Paper properly,  Understand consequences.  Consult legal AND your accountant.  

Note: for our purposes we are not touching the issue of collateral.  Whole other discussion... 

Good questions! 



Looking for the KK Healthcare Exchange?  Click Here. 

MISSED OUR RECENT WEBINARS?  CLICK HERE ANYTIME!
Looking for HIPAA and compliance forms?  
Click here to visit our website.
Have a question or comment for Jennifer?
Contact Jennifer at Jennifer@Kirschenbaumesq.com or  at (516) 747-6700 x. 302.
Interested in having Jennifer speak at an event or
at a residency/fellowship program?
Contact Jennifer directly at (516) 747-6700 x. 302 or at Jennifer@Kirschenbaumesq.com
Click here to learn about
K&K's Prepaid Legal Audit/Investigation Defense Now!